Canada: The Impact Of A Design In A Trademark Dispute Revisited - 2016

In our
newsletter article of March 2015 we discussed a decision of the
Federal Court which had given little weight to the use of a design
element consisting of an oval shaded background of a trademark. An
appeal from this decision has been dismissed.

Facts

The applicant filed two trademark applications based on use in
association with, among other things, gourmet pizza and restaurant
services. The first application related to the word PIZZAIOLO. The
second application related to the design shown below.

The Opposition

The opponent opposed both of the applications on the basis that
the applied-for marks were confusing with its registered trademark
LA PIZZAIOLLE (or the variant PIZZAIOLLE), which had been used by
the opponent in Canada prior to the applicant's claimed date of
first use. The specific grounds of opposition alleged that the
applied-for marks were not registrable, not distinctive and that
the applicant was not the person entitled to registration.

The Trademarks Opposition Board Decision

The hearing officer allowed the opposition and refused the
application for the word mark in its entirety. However, with
respect to the PIZZAIOLO DESIGN application, the opposition was
refused and the application allowed to proceed to registration. The
hearing officer determined that the applicant had satisfied its
onus to show the mark should be registered "owing to the
pronounced differences" between the design mark and the
opponent's registered trademark.

The Federal Court Decision

The primary issue before the court involved the determination of
whether the two trademarks were confusing. The judge concluded that
this determination must be considered from the point of view of an
average consumer.

In particular, the determination must be made on the basis of a
first impression in the mind of a casual consumer somewhat in a
hurry, who had no more than an imperfect impression of the mark
that had been registered and did not pause to give the matter any
detailed consideration, scrutiny, or to examine closely the
similarities or the differences between the marks. The application
of this test requires an overall examination of the marks in issue,
without close scrutiny or a side by side comparison.

The judge referred to the well-known Masterpiece decision of the
Supreme Court of Canada. In particular he emphasized that when an
opponent relies on a registered word mark, the assessment of
confusion must give consideration to not only the current form of
use of the registered trademark but also the likelihood of
confusion arising from the use of the mark that is permitted by the
registration. The current use of a registered word mark does not
limit the rights of its owner because the registration grants the
owner of a word mark the right to use the words that constitute the
mark in any size and with any style of lettering, colouring or
design.

Applying this principle, the judge determined that the hearing
officer ought to have recognized that the opponent was authorized,
based on the rights granted to it from the registration of its word
mark LA PIZZAIOLLE, to use the words LA PIZZAIOLLE or PIZZAIOLLE
"in any size, and with any style of lettering, colour or
design", and, therefore, to depict these words in a manner
identical to or very similar to that of the PIZZAIOLO Design mark
with the same style and colour of lettering as well as the same
background colour.

The judge said that the applicant's design mark was made up
of the word PIZZAIOLO written on a green oval background,
accompanied by the words "GOURMET PIZZA". These words
were in no way striking or unique and of a generic nature. The word
PIZZAIOLO was the dominant element of the design mark.

As a result of the hearing officer's failure to carry out
such an analysis the judge concluded that the hearing officer had
committed an error which affected the reasonableness of his
decision and the appeal was allowed.

The Federal Court of Appeal

The only issue before the appeal court was whether the judge of
the Federal Court had properly applied the reasonableness standard
that applies to decisions made by the hearing officer. In order to
apply this standard the court was required to focus on the hearing
officer's decision.

Applying this approach the court concluded that there was
nothing inherently distinctive in the use of an oval design as the
background for the applied-for mark. The word PIZZAIOLO continued
to be the dominant feature of the design mark. As a result, when
one considered the two marks in the same context as was mandated by
Masterpiece there were no more differences than when comparing the
two word marks concerning which the hearing officer had concluded
that there was a likelihood of confusion.

The court observed that the registration of the PIZZAIOLO DESIGN
application would provide some flexibility as to how the applicant
could use it; however, the registration of a specific design limits
the graphic variant that would constitute use by the applicant of
its registered mark pursuant to section 4 of the Act. The
deviations from the registered design must not change the
distinctiveness of the mark; it must retain its dominant
features.

In light of this finding, the court concluded that but for the
error of law made by the hearing officer (the failure to consider
the full scope of the rights confirmed by the registration of the
opponent's mark), the officer could only reach the same
conclusion with respect to the design mark as was reached with
respect to the word mark. The decision to dismiss the opposition
concerning a design mark was not within the range of acceptable and
defensible outcomes and the Federal Court had properly applied the
reasonableness standard of review. As a result, the appeal was
dismissed.

Before concluding its decision the court said that one should be
careful not to give the principle set out in the Masterpiece case
previously referred to, too great a scope, for there would no
longer be any need to register a design mark when one has a word
mark. The current decision was entirely based on the facts of the
case and the officer's finding as to what would constitute a
proper use of the registered trademark. When comparing marks one is
always limited to "use that is within the scope of the
registration".

The court has previously said that cautious variations of a
registered mark can be made without adverse consequences if the
same dominant features are maintained and the differences are so
unimportant that an unaware purchaser of the goods would not be
misled. This principle provides guidance as to what graphic or
other deviations from a mark as registered are acceptable.

Comment

Hopefully this decision will prevent the overly broad
application of the principle that on an assessment of confusion
consideration must be given to not only the current form of use of
the registered trademark but also the likelihood of confusion
arising from the use of the mark that is permitted by the
registration. In this regard, the permitted versions of the mark
will be restricted to the versions that maintain the same dominant
features as the mark and the differences must be so unimportant
that an unaware purchaser would not be misled.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
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